On this page is a restricted Stock Unit Projection calculator or RSU calculator. Enter details of your most holocene RSU grant, your company ‘s vest agenda, and some assumptions about your tax rate and your employer ‘s future returns. From there, the RSU expulsion instrument will model the total economic value of your grant over the years .
Restricted Stock Unit Modeling Calculator
Using the RSU Projection Calculator
To use the RSU projection calculator, walk through the follow steps .
- Enter the amount of your new grant – whether an offer grant or an annual refresh.
- Estimate how much your RSU value will increase per year.
- Input your current marginal tax rate on vesting RSUs.
- Decide on your strategy. “Sell Vests” assumes you sell immediately upon vesting shares, while “Hold All” assumes you keep your granted shares.
- Let us know your company’s RSU calculation. “Share Conversion” is for companies that convert to a share amount upfront and expose unvested shares to market pricing, while “Fixed Dollars” converts to a share amount only at vest.
By default option, the calculator assumes your grant vests evenly over four years, with a annual “ cliff ” and quarterly vests. The cliff is the first date you receive any parcel of the fresh grant. Cliffs are distinctive for a new hire grant, although ongoing grants ( besides known as top-ups or refreshers ) sometimes vest immediately .
Advanced: Set a Vesting Schedule
If your ship’s company has a different restricted share vesting agenda or your shares do n’t have a 12-month cliff :
- Hit the “Show” button for the Vesting Schedule.
- Enter the percentage of your grant that vests in each year (up to year 6).
- Choose the vesting schedule your company follows – Annually, Quarterly, or Monthly.
- Set the length of the RSU cliff or the month where you first receive any percentage of the new vest.
RSU Projection Outputs
There are two output options – if you choose “ Calculate, ” you ‘ll receive a numeral projection of your strategy. “ Draw Graph ” will compute a numeric projection and besides show you the accumulative breakdown in compensation from your newly concession over the vest time period .
- End of Year: in the table header, you can see which year the tool is projecting.
- Total Amount Granted: If your company exposes unvested shares to market pricing, this field projects the actual dollar value of your grant by totaling over vesting periods. If it converts to shares at a fixed value at vest, it will equal your initial grant.
- Total Tax Paid: This field shows how much you paid in taxes based on what you owe at vest time.
- Ending Cash Balance: If you choose to sell your shares immediately, this field shows the balance at the end of the last projected year (at 0% interest).
- Ending Stock Balance: If you choose to keep your shares, this field shows the estimated value of your stock at the end of the projection.
If you choose to graph your scenario, you can see how the fresh grant evolves. The graph will estimate your cash at the end of each year, or your stock ‘s fairly measure ( including and market derive or loss if you hold your shares ) .
I ‘ve been working at companies that issue RSUs for … well, my entire career ( yes, at my day jobs ). here are some of the questions about RSUs that come up .
What are RSUs?
RSUs or Restricted Stock Units are a form of equity recompense where companies promise to grant you future employer stock based on respective criteria. For some industries, they are a large part of overall compensation – in some senior roles, they are the largest component. Most normally, RSUs are promised upfront and rewarded on a agenda. For exemplar, one coarse schedule for a new lease is RSUs awarded over four years with a annual “ cliff ” ( or first vest vault ), and the remaining shares vesting evenly over four years, every quarter. Most companies besides refresh or “ top up ” your grants annually or in junction with high-performance or a promotion. sometimes these refreshers vest immediately, while early companies besides add a newfangled cliff. RSUs about constantly have a value. RSUs convert to shares and a claim on the future performance of a business, so except in the case a company goes bankrupt and fairness is wiped out, there ‘s a future grocery store for that equity. generally in the United States, you owe tax at the fourth dimension your RSUs vest – that is, when they turn into coarse stock. generally, publicly listed companies grant RSUs – although private companies have started to grant RSUs ( liquid is more complicated pre-IPO, although some companies enable a secondary marketplace ) .
Should I always sell my RSUs?
canonically : it’s best to sell your vested shares and diversify your savings to something unrelated to your employer ( and even your diligence ). additionally, your employer might levy extra restrictions on your trade, which makes employer stock less advantageous to hold :
- You probably have a limited trading window or could be restricted at points due to holding insider information.
- You may not be able to buy or write options on your shares (or use them as collateral for things like loans).
- You may be restricted from taking positions in other companies in your industry.
particularly with trading windows, it can be complicated to sell shares at a loss without hitting wash sale rules [ PDF ] from new RSU grants or ESPP shares.
however, there are strong counterarguments in party favor of keeping at least some shares :
- You are probably well versed in your competitive position and potential – if there is any company you are qualified to trade, it’s your employer.
- Sometimes illiquidity works in your favor; if you are blocked from trading mid-quarter, you are less prone to make rash investment decisions because of a fall in the broader market.
- In some cases, you have to hold some shares as a condition of your employment or to qualify for a board seat.
It ‘s not arsenic simple as a binary “ never hold ” or “ always hold ”. Take the diversification argument badly, for sure – Enron, Arthur Andersen, and other companies show it’s possible your equity goes to zero. But you can besides sometimes find success through a concentration in one company ‘s shares – and you do likely have a cognition edge with your employer. All I can say is : it ‘s up to you. Make sure you are at least well-diversified before you take any big swings. personally, I ‘ve sold a reasonable amount of past RSUs, but besides hold a respectable amount of vested shares ( and none of my employers ‘ stock certificate has gone to zero – knock on wood ! ) .
Should I pay taxes I owe on grants in cash?
In most countries ( including the US ), you are required to pay tax on your RSUs american samoa soon as they vest. however, many companies let you choose to pay your taxes using cash rather of selling a assign of newly vested shares to raise cash. In hypothesis, paying your taxes in cash is no different from buying your ship’s company ‘s shares in the loose market. In practice ? It ‘s complicated. For some companies, stock-based compensation is quite significant – and the sum company-wide shares sold for taxes are a substantial share of the lineage ‘s daily average trade volume. It’s sometimes worth it to pay the tax in cash even if you plan to sell within the next few days, to avoid distortions caused by all of the forced selling by your co-workers. Your mileage may vary. ( And if you plan to keep your shares, it ‘s something you should model a well. )
Projecting an RSU Grant’s Effects
specially at many engineering and biotechnology companies, stock-based recompense can be a bombastic component of your entire compensation. And through some market cycles, people who sit on their hands and keep shares have performed highly well – but beware of concentrating besides much risk in a single company. Your employment and benefits already depend on your employer – do you want to add a significant come of savings risk, besides … specially if you do n’t have a substantial aggregate of other assets ?
however, except in the most extreme cases, RSUs are veridical money – this is n’t phantom equity you should write off. If you work at a publicly traded company, or a private company with a secondary coil market, IPO on the horizon, or potential for M & A, take your equity recompense very seriously. RSUs are some of the best benefits an employer can offer and they have the potential to appreciate wildly based on your company ‘s performance … and the market ‘s overall levels, of naturally. Keep an eye out for companies with generous grants – and hopefully, this creature helps you better value your restrict breed ! other Resources :